K-P struggles to spend remaining development fund

Finance department defends money release policy, points to near complete fund disbursement

PESHAWAR: Even as the outgoing provincial government gets ready to present another fiscal budget, albeit a few weeks early since the parliament’s term is ending, a majority of the departments have yet to spend money they had been allocated in the outgoing fiscal year.

With two months left in the fiscal year 2017-18, the Khyber-Pakhtunkhwa (K-P) government has spent only 64 per cent of the total Annual Development Programme (ADP) it had earmarked last June.

This despite the fact that the finance department has so far released over 97 per cent of the allocated funds. Sources in the K-P government said that the low spending shows the inability of departments to spend their allocated budgets.

“This percentage is discouraging, particularly when the departments have only two months left before the closure of the fiscal year,” a senior official of the K-P government said. “Some of the government departments have not developed their capacity of utilising their uplift funds in time while they keep on asking for more funds in the budget.”

According to latest figures from PIFRA (the provincial project to improve financial reporting and auditing), the finance department has so far released around Rs123 billion. The government had earmarked a total of Rs126 billion as the domestic component of ADP 2017-18.

Of this, the different government departments have so far spent only Rs81 billion, leaving the departments two months to spend a whopping Rs42 billion.

This figure also includes around Rs4 billion spent to pay taxes and customs duties for components of the Bus Rapid Transit (BRT) project which is being built in the province. While massive, this expenditure was not originally listed in the ADP. Rather, it had been included in the foreign assistance part of the programme.

Apart from Rs126 billion in locally financed allocations, the K-P government’s total ADP also included a Rs82 billion component of foreign assistance, inflating the overall programme to Rs208 billion. The foreign project assistance includes Rs45 billion for the BRT project, to be provided by the Asian Development Bank (ADB).

Priority sectors

The ruling Pakistan Tehreek-e-Insaf (PTI) had identified education and health as its priority sectors, allocating massive parts of the budget for these sectors. However, the sectors are struggling to spend the funds allocated for them.

Even as the fiscal year comes to a close, the Elementary and Secondary Education Department (ESED) has spent less than half, or 47.8 per cent, of its total allocations. The K-P government had set-aside Rs14 billion for the sector in FY 2017-18 and has thus far released Rs11.1 billion for it.

However, the department has spent only Rs6.7 billion in the past 10 months.

Similarly, the higher education department spent only 38 per cent of its budget, using only Rs2.4 billion of the total Rs6.3 billion earmarked for it. It is far short of the Rs4.2 billion released for it thus far.

Like the education sector, the health department too has used only 49 per cent of the uplift funds earmarked for it. The finance department has so far released Rs10.7 billion for it out of its total allocation of Rs12 billion.

Over allocation

However, there were some sectors who got far more money than their original allocation. The government has released Rs21.7 billion for building roads in the province, Rs8 billion more than the Rs13.7 billion allocated for the sector. Of this, the government has spent Rs17.2 billion, or around 125 per cent of its allocated fund.

Similarly, the government has released an extra billion rupees for the forestry sector which is running the Billion Tree Tsunami afforestation project. It has spent 110 per cent of its allocated Rs2 billion.

The government has thus far released Rs3.17 billion for it of which it has already spent Rs2.2 billion.

For the water sector, the government has released Rs8.4 billion against its original allocation of Rs7 billion, an additional Rs1.4 billion. Of this, the government has so far spent Rs7.2 billion.

Districts hamstrung

The government had allocated Rs28 billion for the districts in the ADP. However, the finance department has released just a third of the allocated funds, or around Rs10 billion. Of this, the districts have so far spent Rs8.1 billion.

This, despite the fact that elected representatives of the local government have often criticised and protested against the finance department for what they term, has been ‘slow release’ of funds for the districts.

However, the finance department has defended itself, claiming that it has been releasing funds as per its release policy which clearly states that the districts have to first spend the money the government has released before they can ask for more.

Published in The Express Tribune, April 30^th, 2018.